The mortgage is a security for the loan for new investment while refinance is reinvestment or repairing of the present condition of the previous investment structure. Mortgage is the security that lender of mortgage makes to the borrower of mortgage. Mortgage in itself is not a debt. It is only a transfer of interest in property to lender as a security for debt, usually a loan of money. So sometimes it refers as lender's security for his debt. This interest transfers from owner to the mortgage lender but there are some the conditions and regulations for this interest that will be returned to the owner of the real estate at the end of its maturity. The term comes from the Old French "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure or by obtaining court order.
That’s why mortgage have two components, Mortgage deeds, Deeds of trust.
Mortgage deeds
This is the first step for mortgage in which lienee convince the lienor for mortgage or loan. The success of this step totally depends upon lienee that how he performed his duty.
Deeds of trust
This step is commonly used to secure repayments of debts. So they are used to create trusts for other purposes.
Procedure of mortgage creates a lien on the title to the mortgaged property. Lien is used for security interest that is granted over a specific property item in order to secure the payment of debt or payment of some other obligations. The person who grants the lien is known as lienor, he is always the owner of property. The person who gets the benefits of lien is called lienee. But lien almost requires a judicial proceeding for declaring the debt to be due and in default or ordering a sale of the property to pay the debt. There are different laws for lien and they vary from country to country. In United States and UK the term lien generally refers to a wide range of encumbrances (a legal term of art that limits and effects the property) and would include other forms of mortgage or charge. In U.S. a lien characteristically refers to non possessory security interests. In 3rd world or common law countries the term lien has concept as a very specific type of security interest, having passive and strict rules to retain but not sell the property until the debt or other obligation is payed. These liens are usually applied on home loans, mortgage, car loans, security interests and chattel mortgage.
Lienee’s role is very important in the economy. They feed back almost all sectors of the state. They fulfil the financial needs of the business sectors, agri sector and some time government sector of the economy. Now for the success and independency of the economy, it is very necessary to promote the financial sectors and financial services provided by private and government sectors.
For each economy, mortgages are provided for two purposes.
- Mortgage Loan
- Commercial Mortgage
Mortgage loan is used for residential mortgage lending for example; Refinance home, Home Loans, Home equity Loan, Home Improvement Loan, etc. While the later is used for lending against commercial property like, agri loans, establishing office for relevant business, starting new business and hiring other equipments like labor and purchasing new machines and technology for the improvement of personal business.
It is common for home purchases by mortgage in every country. Generally speaking, very few persons have sufficient or adequate savings or resources to enable them to purchase home outright. In countries where the demand for home ownership is on the highest peak, strong domestic markets have developed. But it is very important for the lienor of mortgage loans that are available, especially for the residential purposes, how he/she can fully utilize them and how they can secure themselves. For this purpose many but not enough information are provided to the customer of loan specially home loans and home refinance loans by the relevant financial sector. Some times customer feels difficulty in understanding their rules, regulations and payment rules and interest rates at which they have to make payments to the lienee. Complete awareness about the rules is the first right of the customer.
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